Banking giant Wells Fargo & Company (
) on Tuesday caught a big downgrade from analysts at Deutsche
The firm cut its rating on WFC from "Buy" to "Hold" with a $36
price target, suggesting very little upside to the stock's Monday
closing price of $34.70.
A Deutsche Bank analyst commented, "We believe WFC is best
positioned for mortgage activity remaining stronger than expected
given its market share of about one-third. And gains on sale
spreads remain very wide (and have seemingly increased of late).
However, both of these are well known and we believe already
reflected in the stock. Outside of mortgage, other trends may be a
bit sluggish reflecting further NIM pressure (NIM to decline about
15bps in 3Q), only modest balance sheet growth, and likely
higher-than-expected expenses (even outside of those related to
Continuing, "Stepping back longer term, we think WFC could be a
winner from an eventual revamp in the mortgage finance model (i.e.
the GSEs). However, increasing uncertainty in 2013 over how this
plays out may weigh on/limit upside to WFC."
Wells Fargo shares posted modest gains in premarket trading
The Bottom Line
Shares of Wells Fargo (
) have a 2.54% dividend yield, based on last night's closing stock
price of $34.70. The stock has technical support in the $30-$32
price area. If the shares can firm up, we see overhead resistance
around the $36-$37 price levels.
Wells Fargo & Company (
) is not recommended at this time, holding a Dividend.com DARS™
Rating of 3.3 out of 5 stars.
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, as well as a detailed explanation of
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